Micromax to enter new markets in Africa, Middle East, CIS next fiscal year

The company’s international operations from Russia, Nepal, Bangladesh and Sri Lanka, will make up Rs 1,000 crore in revenue by March 2016, doubling up from revenues clocked in 2014-15.Gulveen Aulakh | ET Bureau | Updated: February 05, 2016, 08:31 IST

NEW DELHI: Micromax, India's top home-grown phone maker, will enter new markets in Africa, West Asia and CIS countries in the fiscal year beginning April 1, a top executive said.

The company, which has faced senior management challenges, has renewed its international expansion plans amid intense competition at home.

"We will be entering into markets like Armenia, Kazakhstan and Georgia in the CIS region, we are exploring Saudi Arabia and Iran in the Middle East and cluster of countries in Africa, which can allow us to quickly expand," said Amit Mathur, senior vice-president-international business at Micromax. "Supplies to CIS countries will begin this quarter."

The company's international operations from Russia, Nepal, Bangladesh and Sri Lanka will make up Rs 1,000 crore in revenue by March 2016, doubling up from revenue clocked in 2014-15. The company had clocked Rs 10,450.47 crore in revenue in the fiscal year through March 31, 2015, jumping 47% on year. There are no projections for the company's revenue in the on going fiscal year.

Mathur expects international operations to grow by 50-80% in revenue in 2016-17, while the contribution to total operations should double from present 8%. He estimates international operations to contribute nearly half of the company's total revenue in three to four years.

Sales volume in international markets make up 15-20% of total phones sold by Micromax annually, which presently stands at about 36 million. The company sells about 1 million phones a month overseas, of which a quarter are smartphones. In the October to December quarter, it sold about half a million 3G and 4G phones to Russian telecom operator MegaFon* and said that the share of the latter was steadily rising.

Micromax had entered Russia in January 2014 and had plans to enter other European countries subsequently. Although it did venture into parts of South Asia, its plans for further expansion in Europe and other overseas markets had stalled as it faced management challenges and strong competition at home. It has since beefed up its senior management, hiring back some old hands, and the latest move is a renewed effort at foreign expansion even it consolidates its No. 2 position in its home market, where it trails Samsung.

The international division will appoint local national distributors and locals as part of the lean team in these areas to get the reach. It will, in effect, replicate the model successfully adopted in Russia, Nepal, Bangladesh and Sri Lanka, where Micromax's operations are profitable.

"We are open to working with operators and large format stores in the new markets," Mathur added. For entering the CIS region, Micromax has tied up with an operator, which offers mobile services in 14 countries in the CIS region.

Mathur added that the currency fluctuations in Russia, which started in latter part of 2014 and continued in 2015, gave important lessons to Micromax on hedging and risk mitigation, which it will now use in markets like Africa, where certain regions have experienced massive currency fluctuations over 2015.

"We started billing in rouble rather than in dollars, and hedging, which has helped us immensely over the last six to eight months," Mathur explained. At present, Micromax has a 5% share overall in Russia, and is among the top five players. In the sub-Euro 50 price bracket, it claims to have a 9% share, citing GfK data.

The Gugraon-based company said it was No. 1 in Nepal and is among the top three in Bangladesh and Sri Lanka, as per GfK, with 12-18 models that were largely in the sub-Rs 20,000 price bracket.

The company operates on a lean structure overseas as it has outsourced local operations such as warehousing and inventory control, therefore, it will increase overall people count to 55 from present 45 as it expands.